What is Online Inventory Management?
Online inventory management is the process of tracking the physical inventory of your business. The tool can be cloud-based, or it can be a software system that uses your resources rather than relying on the cloud for managing the inventory levels, orders, sales, and deliveries in real time, which is particularly needed in retail inventory control and e-commerce inventory management.
We’ll have to understand the flaws of traditional retail inventory management systems first to comprehend the necessity for Online Inventory Management:
- Overstocking & understocking issues
- Lack of real-time visibility into Managing inventory levels
- Time-consuming manual processes prone to errors
- Limited data analysis capabilities
- Inflexibility in adapting to market changes
- Inaccurate demand forecasting
- Heavy carrying costs
- Difficulty in managing multiple sales channels
These shortcomings can lead to inefficiencies, increased costs, and reduced customer satisfaction in retail and e-commerce operations. Online inventory management solves all the shortcomings of the traditional process, making it an efficient inventory management system. Especially at a time when eCommerce sales are projected to reach 23% of total retail sales by 2025, which states the importance of efficient online inventory management.
Key Components of an Effective Online Inventory Management System
An effective online inventory management system is crucial for businesses of all sizes, especially in the age of e-commerce. Here are the key components that make up such a system:
Real-time Inventory Tracking
Online inventory management’s core is being a centralized platform, meaning that all of its data is recorded or stored in one location which is accessible anywhere through the internet. This eliminates data silos and provides a single source of truth. So, as soon as a sale is made, you need to track the stock and its location, or if you want to track any WIP stock, the system will give you the most accurate and live information using Location Inventory Report. This is a key to efficient inventory management, which makes manual data entry redundant.
With the integration of newer technologies in online inventory management, such as Barcodes and SKUs (Stock Keeping Units), streamlining product identification and tracking, stocktaking and order fulfilment is faster and more accurate than ever.
Order Management & Inventory Optimization
The online inventory management system seamlessly connects with sales channels (e.g., your online store, and marketplaces) and automatically imports orders. This is essential for ecommerce inventory management. With a multi-channel business, it is of utmost importance that you have a detailed control rather than a bird eye view of your business; an effective inventory management system will let you monitor order progress from placement to delivery, with real-time updates on order status, shipping information, and potential delays, along the side of receiving alerts for low stock levels, order updates, and potential fulfilment issues, allowing for proactive management.
Sales inventory management isn’t just for stock-keeping but it also helps you with Demand Forecasting. It helps you analyze historical sales data and trends to predict future demand. This helps optimize stock levels and minimizes the risk of stockouts or overstocking, one of the inventory management best practices. With the help of Automated Reordering, managing inventory is easier than ever. All you need to do is set reorder points for each product, triggering automatic purchase orders when inventory falls below a certain threshold.
Reporting and Analytics
When you choose an Online inventory management tool, you get powerful reporting & analytics capabilities. These retail inventory management tools provide you with reports that clearly display key metrics such as inventory turnover, sales trends, and current stock levels. Such tools help you generate customizable reports tailored to specific needs, such as sales by product, inventory valuation, or identifying slow-moving items.
Furthermore, integrating technologies such as RFID and barcode scanners easily increases the accuracy & efficiency of inventory management tracking. When the RFID tags and barcode labels are attached to the products, it helps you automate data capture, which minimizes manual error while providing real-time visibility into your inventory. For the inventory that needs constant monitoring of temperature and humidity, IoT sensors help with its reporting. As realtime data is transmitted to you, it helps prevent spoilage or damage to sensitive goods and ensures optimal product quality. By integrating RFID and barcode scanners along with IoT sensors, a more firm control and efficient inventory management.
Multi-Channel Integration
The channels that are now available for doing business are omnipresent; online inventory management systems must seamlessly integrate with various sales platforms including e-commerce platforms, point-of-sale systems, and marketplaces. The integration with popular ecommerce platforms like Shopify, WooCommerce, & Amazon ensures real-time inventory synchronization & automated order processing along with shipping providers for real-time rate calculations, label printing, and shipment tracking.
E-commerce inventory management connects with your business’ accounting systems to streamline financial reporting and inventory valuation. This integration ensures consistent inventory data across all channels in your business, from e-commerce websites to brick-and-mortar stores, maintaining accuracy and preventing overselling or understocking of the inventory.
Inventory Classification and Optimization Techniques
No two products are alike, some products are your cashcows and some products soak up your working capital. A research has found that $300 billion in revenue is lost due to markdowns, you need to have a proper understanding of how to manage inventory so that your best product is always stocked up and your low-value items are just enough to pass by, so that your working capital is properly optimized.
Start with ABC’s
ABC analysis is a core concept in the basics of inventory management based on Pareto principle, which suggests that roughly 80% of effects come from 20% of causes. So, how does that translate for online inventory management? Well, it helps you prioritize your inventory based on its value, it can be categorized into three categories:
- A-items: High-value, contribute most to revenue (around 80%) but represent a smaller portion of inventory (around 20%). It needs careful monitoring and accurate forecasting.
- B-items: They have moderate value & contribute a moderate amount to revenue. Requiring less attention than A-items.
- C-items: These are low-value items that make up a large portion of inventory but contribute the least to revenue. They require the least amount of attention and can be managed with simpler controls.
ABC analysis helps you understand how to manage inventory effectively by keeping your focus on high-value items along with optimizing the stock levels, and improving stock forecasting that leads to better resource allocation and an increase in profitability.
Just-in-time Inventory Management: Lean and Agile
Just-in-time is an approach where you receive goods only when required for production or sales. The Just-In-Time (JIT) approach helps your business to minimize your storage costs and reduces wastage of resources. This, in turn, will make it a worthwhile inventory management practice for any retail business.
You will reduce the risk of overstocking on deadstock (that one item on your shelves, no matter what, doesn’t get sold) and free up your working capital by receiving inventory "just in time". Just-in-time requires precise demand forecasting and a strong supplier relationship. This makes it a crucial part of modern inventory management practices aimed at optimizing stock levels and enhancing the overall operational efficiency of your business.
Top 3 Platforms for Online Inventory Management
1. Omniful.ai - The Solo Inventory Management System You'll Need
Omniful.ai is the most inventive and comprehensive AI-powered e-commerce inventory management system for all businesses. This system is for anyone who owns a retail, commerce, or logistics business. It is a solid e-commerce inventory management solution that offers:
Unparalleled Omnichannel Capabilities:
- Real-time order routing across multiple sales channels
- AI-driven inventory optimization for multi-warehouse operations
- Seamless integration with 100+ shipping providers worldwide
Advanced Warehouse Management:
- AI-powered picking route optimization
- Real-time inventory tracking with lot & expiry date management
- Support for high-volume throughput in various retail environments
Intelligent Transportation Management:
- Advanced route optimization for hyperlocal and cross-city deliveries
- Real-time driver and package tracking
- Automated order batching and vehicle capacity management
Integrated Point of Sale:
- Multi-location, multi-register support with e-invoicing capabilities
- Seamless integration with OMS for true omnichannel operations
- Real-time reporting and insights for data-driven decision-making
Omniful's cloud-native architecture and modular approach allow your business to scale effortlessly, starting with essential features & expanding as and when needed. With Omniful.ai’s AI-powered capabilities and comprehensive feature set, Omniful.ai is leading retail inventory management and e-commerce operations.
2. Zoho Inventory: Simplifying Inventory Management for Growing Businesses
Zoho Inventory is a very popular cloud-based inventory management system for small to medium-sized e-commerce businesses.
What Zoho can really do for you:
- Consolidate your inventory management across sales channels
- Automate reordering based on your stock levels
- General demand forecasting
- Integration with Zoho's suite of business applications
Zoho Inventory looks exhaustive on the surface. The truth is that it lacks some of the core advanced AI & automation features offered by Omniful for larger enterprises.
3. Cin7: Powerhouse of a Tool
Cin7 is an inventory & order management platform which is developed for mid-market multichannel sellers.
It provides tools for:
- Inventory control
- Order processing
- Supply chain management
Key elements include:
- Multi-location inventory tracking
- EDI and B2B order management
- Manufacturing and assemblies
- Extensive integration options
Cin7 offers an umbrella sort of functionality but it may just require a more complex setup and configuration compared to Omniful's plug-and-play approach for rapid deployment, which is preferable by most.
Final Thought
Online inventory management is no longer a pipe dream or luxury for managing the inventory; it is a necessity for small to large business owners. The degree of need may change, but the fact that it is almost impossible to function without an excellent retail inventory management system doesn’t change. Each strategy has an important role in executing effective inventory management. From the detailed categorization of ABC analysis to the efficiency of Just-in-Time (JIT) inventory, everything is crucial. The significant bit here is not just managing inventory but also optimizing for a competitive edge in the marketplace.
Frequently Asked Questions
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What's the simplest way to get started with online inventory management?
The super-easy way to begin with online inventory management is by choosing an IMS that integrates with your existing e-commerce platform. This lets you automate important tasks easily, like tracking sales and updating stock counts. And, well, these are both the very basics of inventory management without manually entering data. You can also simply contact Omniful.ai, and with our plug-and-play approach, you'll be ready to use our online inventory management system in no time. -
Can online inventory management software help with omnichannel selling?
Undoubtedly! As you grow, you might start selling on multiple online and offline channels like Amazon, social media, or even brick-and-mortar stores. An effective online inventory management system will track your inventory across all these omnichannels, giving you a unified view of your precious stock and preventing overselling or understocking. -
How can online inventory management improve my sales?
Effective sales inventory management is all about having the right products in stock at the right time. Online inventory management helps you avoid stockouts, which frustrate customers and lead to lost sales (you wouldn't want to disappoint your customer). Plus, features like demand forecasting help you anticipate what your customers crave from your business so you can proactively stock up and capitalize on every opportunity.
